The cost of purchasing a new-build home has increased by 47% over the last 10 years, even after adjusting for inflation, research from Alliance Fund has revealed.

This comes as new-build properties now command a 37.3% house price premium compared to the existing market. 

Alliance Fund, the end to end real estate fund, analysed new-build property values over the last decade across the UK property market, as well as how the price of a new home compares to existing market stock. 

This research has found that, even after adjusting for inflation, the average new-build property has increased by 10.6% in the last year, up 47.1% in the last decade. The largest annual increase has been enjoyed across the South West, where new-build homes are now commanding 14.7% more than they were just a year ago. 

The South West has also seen the best new-build performance over the last 10 years, with the average new home commanding 93.6% more than it did in 2012, after adjusting for inflation.

Alliance Fund CEO, Iain Crawford, commented: “The cost of a new home has increased substantially in the last year, let alone the last decade, and those looking to get that first foot on the ladder are now facing a far tougher task as a result of a prolonged period of boom throughout the property market. 

“At the same time, the market premiums that new homes are commanding has also strengthened and while this demonstrates the superior offering of the new-build sector versus existing market stock, it does widen the affordability gap for many homebuyers.”

Furthermore, while house prices have been increasing across the board, the research by Alliance Fund also showed that the price premium paid on new-build homes has also been increasing.

A decade ago, the average new-build commanded a 21.2% house price premium compared to the average cost of an existing property.

Today, this new-build house price premium sits at 37.3%, meaning the gap has widened by 16.1% between the new-build and existing market when it comes to the market price achieved.  The price gap between the new and existing market has increased by 11.6% in the last year alone.

Crawford added: “Of course, a new-build home presents many advantages that an existing home does not, such as a smoother sale and no onward chain to consider, greater energy efficiency which has never been more important in the current climate and the additional benefit of incentives offered by many developers such as the removal of stamp duty on the purchase. 

“With many now predicting an end to the pandemic property market boom, a new-build purchase is probably the safest path when looking to negate any downturn in property values over the coming months, as they also hold their value to a far greater extent.”

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